Economics Dictionary of ArgumentsHome![]() | |||
| |||
Research and Development: Research and Development (R&D) involves activities aimed at creating new knowledge, products, or processes, and improving existing ones. It drives innovation and technological progress, enabling firms and economies to stay competitive, develop advanced technologies, and meet market demands. R&D is crucial for long-term growth and economic development. See also Research funding, High tech sector, Innovations, Inventions, Industrial policies._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
Author | Concept | Summary/Quotes | Sources |
---|---|---|---|
L. Alan Winters on Research and Development - Dictionary of Arguments
Krugman III 158 Research and Development/R&D/Ulph/Winters: The market for the output of this sector is the world market, of which the particular economy is only a very small part. Because of the fixed costs of R&D there are only a few major international firms competing in this market, so it is inherently imperfectly competitive. However, because in R&D success breeds success, entry cannot prevent these major firms from enjoying supernormal profits or rents even after deduction of the costs of R&D. The simplest way of capturing this in our model is to operate with a fixed number of firms. Cantwell (1989a)(1) provides the most recent evidence and a good discussion of this persistence phenomenon. Taken together these assumptions mean that the model is essentially one in which countries are in competition with one another through their manpower and industrial policies to get as large a share of these rents from the international market as they can. >Manpower policy, >Industrial policy, >International trade, >Competition, >Progress, >Technical progress. Krugman IIII 167 In most of the economics literature, research and development are treated as a single process labeled R&D. However, in a number of contexts it is now being recognized that it is important to distinguish carefully between research and development as two distinct though interrelated features of the process of generating new products/technologies. Distinction research/development: (…) it might be that while the “scientists” who work on research are fairly mobile, the “engineers” who work on development are not. Equally, while it may be possible for companies to locate research labs abroad where the scientists are, development work must take place where production is to be carried out. (…) there are fixed proportions in research and development, capturing the idea that the two are distinct and necessary phases of investment, and one cannot be substituted for the other. Even though on the demand side, scientists and engineers may not be substitutable, it is always possible that they are perfect substitutes on the supply side-that essentially there is a pool of people who become either scientists or engineers, depending on which pays most. Krugman IIII 168 Knowledge Spillover: In the literature on spillovers it is generally argued that the presence of spill overs is a reason why the private rate of return to R&D is less than the social rate of return, so there is a justification for policy intervention to encourage firms to undertake R&D. However, strictly speaking, this only applies to a closed economy. >Kowledge spillover. Krugman III 169 Subsidies/market failure: (...) while in a closed economy it probably does not matter very much which (…) policies are adopted, in an open economy with mobile labor it matters a great deal. The essential point is that the fundamental market failure that generates the rationale for policy in all of these models is that, due to its imperfectly competitive nature, the private sector does not sufficiently expand ist production. >Imperfect competition. Consequently, it insufficiently expands its use of R&D and hence its demand for scientists. Fundamentally it is this lack of demand that has to be tackled. Closed economy/open economy: While in a closed economy this lack of demand can be cured by reducing the cost of training scientists and hence encouraging firms to use more of them, in an open economy with mobile scientists this policy is disastrous because it simply lowers the cost of scientists to the rival country conferring to it all the benefit. 1. Cantwell, J. 1989a. Technological innovation and multinational corporations. Oxford: Basil Blackwell. David Ulph and L. Alan Winters. „Strategic Manpower Policy and International Trade.“ In: Paul Krugman and Alasdair Smith (Eds.) 1994. Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Winters, L. Alan EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z